Special Indian law covers nationalised banks, so debts owed to them are excluded from agriculturists' scaling-down relief.
A nationalised bank constituted under the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970 was treated as a corporation formed in pursuance of a special Indian law within section 4(e) of the Andhra Pradesh (Andhra Area) Agriculturists Relief Act IV of 1938. The Court held that "special Indian law" means a law enacted by the Indian Legislature, and that a corporation created by or under such a law is covered by section 4(e). As a result, the bank's debt was outside the scaling-down relief under section 13, the Article 14 challenge failed, and the decree could not be reduced on the basis of agriculturists' debt relief.
Issues: Whether a nationalised bank constituted under the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970 is a corporation formed in pursuance of a special Indian law within section 4(e) of the Andhra Pradesh (Andhra Area) Agriculturists Relief Act IV of 1938, and consequently whether the debt due to the bank is outside the scaling-down relief under section 13 of that Act.
Analysis: The expression "special Indian law" was held to have a clear meaning as a law enacted by the Indian Legislature. The Court rejected the narrower construction that it referred only to legislation of the British Parliament. It further held that the words "formed in pursuance of" do not exclude a corporation created by or under the special Indian law itself. The Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970 was therefore treated as a special Indian law, and the appellant bank as a corporation to which section 4(e) applied. The argument based on pre-nationalisation advances was not accepted, as no proper pleading or proof showed that the debt sought to be recovered should be split or treated differently. The challenge based on Article 14 also failed, since the constitutional objection to section 4(e) proceeded on an erroneous understanding of "special Indian law".
Conclusion: The bank fell within section 4(e) and the debt was not liable to be scaled down under section 13 of the Act.
Final Conclusion: The decree of the High Court was interfered with to the extent it applied agriculturists' debt relief to the appellant bank, and the bank was held entitled to recover the decretal amount without scaling down.
Ratio Decidendi: A corporation created by or under a special Indian law is within section 4(e) of the Andhra Pradesh (Andhra Area) Agriculturists Relief Act IV of 1938, and debts due to such a corporation are exempt from scaling down under that Act.
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